Update: Five years in the making: PSC adopts net-metering rule

The Mississippi Public Service Commission took its time – five years – to develop and adopt a rule for “net metering,” which will allow homeowners and businesses to produce their own power and sell it to electric utilities.

The agency established a docket in 2010, commissioned an independent study and filed it in September of 2014, on which the rule was largely based.

The commissioners subsequently set a deadline of July 1, 2015 for written input from all facets of the electric power industry, from producers to users, in shaping the rule.

The order passed Thursday that adopts the rule agreed with some of those comments as well as criticism made in a hearing on Oct. 6, and disagreed with others.

It took the three-man commission only a few minutes Thursday to pass the rule, prompting Chairman and Central District Commissioner Lynn Posey to quip:

“A year per minute – not bad for government work.”

Mississippi becomes the 45th state to adopt a rule for net-metering, so called because the basis is the net excess of power produced by someone who would otherwise be charged for all its electricity.

“Such a program supports consumers’ right to self-supply electricity . . . and the right to connect to the grid, [providing] increased consumer choice and [introducing] innovation into a market dominated by monopolies [and] the potential to put downward pressure on rates . . . ,” the rule states.

The state’s two investor-owned utilities – Entergy and Mississippi Power – are monopolies regulated by the commission. They argued that net metering would put upward pressure on the cost of power and could shift costs from those who participate in the plan onto those who don’t.

Yet, Entergy said in prepared statement after the final vote that the utility is “pleased . . . that the Public Service Commission adopted . . . a framework designed to allow flexibility over time and minimize the potential for adverse consequences to customers who don’t net meter.”

“The final rule appears to be a reasonable compromise that has addressed the major substantive issues raised by various parties.”

Mississippi Power issued a statement on Dec. 4 saying that it is reviewing the rule “and will provide appropriate comments once the review is completed. The company . . . looks forward to continuing to work with the Commission on the future use of renewable energy in the state for our customers.”

Entergy had previously said that the commission’s study by Synapse Energy Economics of Cambridge, Mass., was a “theoretical” cost-benefit analysis – and not based on actual figures.

Entergy had suggested paying the producers 4 cents to 4.5 cents per kilowatt hour, its calculation of the cost derived by “avoiding” the production expenses assumed by the home- or business-based solar-energy producers.

The commission settled on a compromise of 7 cents to 7.5 cents kWh for three years, at which time the “adder” of 2.5 cents will be “replaced” after “actual benefits” are determined.

Concern was expressed about the potential cost-shifting onto nonparticipating customers – including those with lower incomes — and the exclusion of such customers from participating.

So the commission required that Entergy and Mississippi Power offer an additional 2 cents per kWh for the first 1,000 lower income participants for 15 years.

The PSC also requires the two investor-owned utilities to notify all customers within three months after the effective date of the order of the opportunity to net meter. The rule goes into effect in one month.

The South Mississippi Electric Power Association, which has 11 member cooperatives, argued that the commission cannot impose the net-metering rule on them because that’s rate-making and supersedes federal law.

But the commission argued otherwise and gave the association till Oct. 3, 2016 to file its net-metering plans.

The association has not responded to a request to comment on the rule that was approved by the commission.

Co-ops that buy their power from the Tennessee Valley Authority already comply with the rule, the commission decided.

In another matter, Southern District Commissioner Steve Renfroe had voiced concern about proper installation and safe operation of the solar panels to avoid fires.

The commission calls for a working group to be set up by March 1 to monitor and report on safety.

The program will be subject to a comprehensive review after five years.

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